"We’ve got good news and bad news." The old joke fits the findings from our latest nonprofit economic survey, which looked at how charitable organizations fared financially between March and May 2009. The good news is that the proportion of nonprofits reporting decreased contributions, 52 percent, remained unchanged from our previous survey, which covered October 2008 through February 2009. So things apparently didn't worsen dramatically for charitable organizations between March and May.

The bad news is that the numbers don't reflect the stress the economy is placing on nonprofits. As one participant put it, "We are hanging on, barely." Another reported, "The only reason we are still solvent is that we had a financial crisis and could no longer pay our utility bill. After media coverage of the situation, we were inundated with generosity and kindness, and the donations covered the utility bill and the excess paid off outstanding bills, with a little cushion for the future. We were very fortunate. We realize this is a one-time deal, but it has put us back on our feet."

Still, the numbers do give us insight into the impact that the recession is having on charitable organizations. For the specifics, read on.

The Survey

Newsletter readers representing 2,279 charitable organizations—2,098 public charities (92 percent) and 181 private foundations (8 percent)—took the survey on-line between June 8 and 22, 2009. This was the second of three nonprofit economic surveys that we will conduct in 2009.

Contributions

We asked, "Did total contributions to your organization increase, decrease, or stay about the same between March 2009 and May 2009, compared to the same period a year earlier?" The results were remarkably consistent with our survey covering October 2008 through February 2009:

Change in Contributions

Period Covered by Survey

Contributions Decreased

Contributions Stayed about the Same

Contributions Increased

Don't Know

March-May 2009

52%

29%

18%

1%

October 2008-February 2009

52%

27%

20%

1%

The primary reasons that contributions dropped remained consistent with the earlier survey as well:

Reason Contributions Decreased

October 2008-February 2009

March-May 2009

Fewer individuals gave

71%

69%

Gifts from individuals were smaller

71%

68%

Corporate gifts were smaller

39%

38%

Private foundation grants were smaller

34%

37%

Corporate gifts were discontinued

25%

23%

Private foundation grants were discontinued

23%

22%

Government grants were smaller

13%

14%

Government grants were discontinued

8%

7%

Government contracts were smaller

6%

6%

Government contracts were discontinued

3%

3%

Grantmaking

We asked grantmakers, "Did the total amount of money your organization awarded increase, decrease, or stay about the same between March 2009 and May 2009, compared to the same period a year earlier?" Their responses showed only slight change from our previous survey:

Change in Grantmaking

Period Covered by Survey

Amounts Awarded Decreased

Amounts Awarded Stayed about the Same

Amounts Awarded Increased

Don't Know

March-May 2009

36%

39%

23%

1%

October 2008-February 2009

31%

44%

22%

2%

As we did in our previous survey, we asked grantmakers if the economy had caused them to change their grantmaking practices or guidelines between March and May. Some 43 percent said that they had, compared to 41 percent in our previous survey. Specifically, they:

Change in Grantmaking Practices

October 2008-February 2009

March-May 2009

Cut back on program types funded

17%

20%

Reduced payouts already committed to

8%

9%

Increased grantmaking to help grantees cope

5%

7%

Stopped accepting applications

7%

6%

Accepted applications only from previously funded organizations

5%

6%

Did not make payouts committed to

1%

1%

Demand

Some 58 percent of organizations reported that demand for their service had increased. Again, the responses to this question were consistent with our earlier survey:

Change in Demand

Period Covered by Survey

Demand Decreased

Demand Stayed about the Same

Demand Increased

Don't Know

March-May 2009

6%

34%

58%

1%

October 2008-February 2009

6%

34%

59%

1%

How Nonprofits Are Coping

When asked, "How does your 2009 annual budget compare to your 2008 budget?" 36 percent of organizations said it had decreased, 27 percent reported it had stayed about the same, 36 percent stated it had increased, and 1 percent didn't know. Again, these results are very similar to those from our previous survey:

2009 Budget Compared to 2008 Budget

Period Covered by Survey

Budget Decreased

Budget Stayed about the Same

Budget Increased

Don't Know

March-May 2009

36%

27%

36%

1%

October 2008-February 2009

35%

26%

58%

2%

Organizations that had cut their budgets took the following steps to do so:

Measure Taken to Cut Budget

October 2008-February 2009

March-May 2009

Reduction in program activities/services

57%

54%

Salary freeze

45%

44%

Hiring freeze

37%

33%

Layoffs

30%

29%

Salary reduction

20%

23%

Reduction in employee benefits

20%

21%

Reduction in operating hours

13%

16%

We'll follow up on this survey in October, when we conduct our annual nonprofit economic survey. Those results will be published in our December 2009 issue.

Suzanne E. Coffman is GuideStar's director of communications and editor of the Newsletter. Chuck McLean, GuideStar's vice president for research, and Carol Brouwer, research assistant, conducted, analyzed, and prepared the report on the June 2009 nonprofit economic survey.